Key Points
- •U.S. Treasury Secretary Bassett expressed skepticism about the EU's efficiency in responding to potential "Greenland Tariffs."
- •Bassett suggested the EU is likely to establish a working group as its initial response.
- •This could lead to a delay in the activation of the EU's counter-coercion instrument.
Bassett's Doubts on EU's Strategy
U.S. Treasury Secretary Bassett expressed skepticism about the EU's quick response to Trump's proposed 'Greenland Tariffs' during a forum in Davos, Switzerland, on January 20. Bassett's comments highlight concerns over EU decision-making inefficiencies, potentially impacting transatlantic trade dynamics amid substantial geopolitical tensions.
During the World Economic Forum in Davos, U.S. Treasury Secretary Bassett voiced doubts regarding the EU's prompt reaction to the U.S.'s "Greenland Tariffs." Bassett posited that the EU would likely convene a "dreadful European working group" as its primary action, a step he views as the union's strongest possible response. This observation stems from Bassett's perception of the EU's challenges in achieving swift alignment among its 27 member states.
"The ability of the EU's internal mechanisms to align swiftly is often overestimated," Bassett remarked. These statements signal a potential lack of immediate resolution in trade tensions between the U.S. and the EU. Bassett noted that the activation of the EU's counter-coercion instrument might encounter delays, which could impede full access for U.S. companies into the EU single market. This situation may reflect broader economic coercion challenges faced by the EU in the current global trade climate.
Washington's general reaction appears to be dismissive of the EU's capacity to implement its counter-coercion strategies effectively. Bassett commented to reporters that despite possessing this regulatory tool, "I think they will first establish that 'dreadful European working group.'" The sentiment conveyed by Bassett's remarks suggests that the anticipated actions might not possess the necessary impact for an effective response.
EU's Counter-Coercion Instrument Faces First Major Test
The EU's Anti-Coercion Instrument, which was initiated in late 2023, is designed to counteract economic pressures. However, it has not yet been deployed against a significant trade partner like the U.S., presenting a potential test of its effectiveness in the current circumstances.
Coincu's research team observes that the EU's delay in activating the counter-coercion instrument could result in prolonged trade tensions. With potential limitations on market access, U.S. firms might encounter difficulties, thereby escalating the stakes for both parties involved. Historical trade conflicts underscore these geopolitical tensions.